Today’s federal government—massive spending growth and epic betting

One can legitimately ask whether the federal government has simply grown too big, complex and unwieldy to be managed at all

The Trudeau government’s 2024 budget landed with a thud, evoking little enthusiasm and drawing spirited criticism from business leaders, investors, provincial premiers and (of course) the opposition parties. Several elements of the budget have garnered outsized attention, notably the pledge to run endless deficits, the imposition of higher capital gains taxes, and various new programs and policy initiatives intended to address Canada’s housing crisis.

But the budget includes a few eye-catching data points that have been downplayed in the subsequent political and media commentary.

One is the sheer size of the government. The just-completed fiscal year marked a milestone, as Ottawa’s total spending reached half a trillion dollars ($498 billion, to be exact, excluding “actuarial losses”). According to the budget, the government will spend $95 billion more in 2024-25 than it planned only three years ago, underscoring the torrid pace of spending growth under Prime Minister Trudeau.

One can legitimately ask whether the federal government has simply grown too big, complex and unwieldy to be managed at all, even if we assume the politicians in charge truly care about sound management. How many parliamentarians—or even cabinet ministers—have a sufficient understanding of the sprawling federal apparatus to provide meaningful oversight of the vast sums Ottawa is now spending?

The ArriveCAN scandal and chronic problems with defence procurement are well-known, but how good a job is the government doing with routine expenditure programs and the delivery of services to Canadians? The auditor general and the Parliamentary Budget Officer provide useful insights on these questions, but only in a selective way. Parliament itself tends to focus on things other than financial oversight, such as the daily theatre of Question Period and other topics conducive to quick hits on social media. Parliament isn’t particularly effective at holding the government to account for its overall expenditures, even though that ranks among its most important responsibilities.

A second data point from the budget concerns the fast-rising price tag for what the federal government classifies as “elderly benefits.” Consisting mainly of Old Age Security and the Guaranteed Income Supplement, these programs are set to absorb $81 billion of federal tax dollars this year and $90 billion by 2026-27, compared to $69 billion just two years ago. Ottawa now spends substantially more on income transfers to seniors than it collects in GST revenues. At some point, a future government may find it necessary to reform elderly benefit programs to slow the relentless cost escalation.

Finally, the budget provides additional details on the Trudeau government’s epic bet that massive taxpayer-financed subsidies will kickstart the establishment of a major, commercially successful battery and electric vehicle manufacturing “supply chain” in Canada. The government pledges to allocate “over $160 billion” to pay for its net-zero economic plan, including $93 billion in subsidies and incentives for battery, EV and other “clean” industries through 2034-35. This spending, the government insists, will “crowd in more private investment, securing Canada’s leadership” in the clean economy.

To say this is a high-risk industrial development strategy is an understatement. Canada is grappling with an economy-wide crisis of lagging business investment and stagnant productivity. Faced with this, the government has chosen to direct hitherto unimaginable sums to support industries that make up a relatively small slice of the economy. Even if the plan succeeds, it won’t do much to address the bigger problems of weak private-sector investment and slumping productivity growth.

Author:

Jock Finlayson

Senior Fellow, Fraser Institute

Related Topics:#2024FederalBudget #FederalGovernment #FraserInstitute #JockFinlayson #SpendingGrowth #Trudeau

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Carbon tax bureaucracy costs taxpayers $800 million

Published on November 19, 2024

Todayville

From the Canadian Taxpayers Federation

By Ryan Thorpe

The cost of administering the federal carbon tax and rebate scheme has risen to $283 million since it was imposed in 2019, according to government records obtained by the Canadian Taxpayers Federation.

By 2030, the cost of administering the carbon tax is expected to total $796 million, according to the records.

“Not only does the carbon tax make our gas, heating and groceries more expensive, but taxpayers are also hit with a big bill to fund Prime Minister Justin Trudeau’s battalion of carbon tax bureaucrats,” said Franco Terrazzano, CTF Federal Director. “Trudeau should make life more affordable and slash the cost of the bureaucracy by scrapping the carbon tax.”

The government records were released in response to an order paper question from Conservative MP John Barlow (Foothills).

The carbon tax and rebate scheme cost taxpayers $84 million in 2023, according to the records.

There were 461 federal bureaucrats tasked with administering the carbon tax and rebate scheme last year, according to the records.

The CTF previously reported administering the carbon tax cost taxpayers $199 million between 2019 and 2022.

Projected costs for administering the carbon tax and rebate scheme between 2024 and 2030 are $513 million, according to the records.

That would bring total administration costs for the carbon tax and rebate scheme up to $796 million by 2030.

But the true hit to taxpayers is even higher, as the records do not include costs associated with the Fuel Charge Tax Credit for Farmers or the Canada Carbon Rebate for Small Businesses.

“It’s magic math to believe the feds can raise taxes, skim hundreds-of-millions off the top to hire hundreds of new bureaucrats and then somehow make everyone better off with rebates,” Terrazzano said.

The carbon tax will cost the average household up to $399 this year more than the rebates, according to the Parliamentary Budget Officer, the government’s independent, non-partisan budget watchdog.

The PBO also notes that, “Canada’s own emissions are not large enough to materially impact climate change.”

The government also charges its GST on top of the carbon tax. The PBO report shows this carbon tax-on-tax will cost taxpayers $400 million this year. That money isn’t rebated back to Canadians.

The carbon tax currently costs 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.

By 2030, the carbon tax will cost 37 cents per litre of gasoline, 45 cents per litre of diesel and 32 cents per cubic metre of natural gas.

Economy

COP 29 leaders demand over a $1 trillion a year in climate reparations from ‘wealthy’ nations. They don’t deserve a nickel.

Published on November 16, 2024

Todayville

From Energy Talking Points

By Alex Epstein

The injustice of climate reparations

COP 29 is calling for over $1 trillion in annual climate reparations

A major theme of COP 29 is that the world should set a “New Collective Quantified Goal” wherein successful nations pay poor nations over $1 trillion a year to 1) make up for climate-related harm and 2) build them new “green energy” economies. In other words, climate reparations.¹

What would $1 trillion a year in climate reparations mean for you and your family?Assuming the money was paid equally by households considered high income (>$50 per day), your household would have to pay more than $5,000 a year in climate reparations taxes!²
Climate reparations are based on two false assumptions:1. Free, wealthy countries, through their fossil fuel use, have made the world worse for poor countries.
2. The poor world’s main problem is dealing with climate change, which wealth transfers will help them with.

But free, fossil-fueled countries have made life better for poor countries

Free, wealthy countries, through their fossil fuel use, have not made the world worse for poor countries—they have made it far, far better.Observe what has happened to global life expectancies and income as fossil fuel use has risen. Life has gotten much better for everyone.³

The wealthy world’s fossil fuel use has improved life worldwide because by using fossil fuel energy to be incredibly productive, we have 1) made all kinds of goods cheaper and 2) been able to engage in life-saving aid, particularly in the realms of food, medicine, and sanitation.
Without the historic use of fossil fuels by the wealthy world, there would be no super-productive agriculture to feed 8 billion humans, no satellite-based weather warning systems, etc. Most of the individuals in poor countries would not even be alive today.

Free, fossil-fueled countries have made the poor safer from climate

The wealthy world’s fossil fuel use has been particularly beneficial in the realm of climate.Over the last 100 years, the death rate from climate-related disasters plummeted by 98% globally.

A big reason is millions of lives saved from drought via fossil-fueled crop transport.⁴

The “climate reparations” movement ignores the fact that the wealthy world’s fossil fuel use has made life better, including safer from climate, in the poor world.This allows it to pretend that the poor world’s main problem is dealing with rising CO2 levels.

The poor world’s problem is poverty, not rising CO2 levels

The poor world’s main problem is not rising CO2 levels, it is poverty—which is caused by lack of freedom, including the crucial freedom to use fossil fuels.Poverty makes everything worse, including the world’s massive natural climate danger and any danger from more CO2.

While it’s not true that the wealthy world has increased climate danger in the poor world—we have reduced it—it is true that the poor world is more endangered by climate than the wealthy world is.The solution is for the poor to get rich. Which requires freedom and fossil fuels.⁵

Escaping poverty requires freedom and fossil fuels

Every nation that has risen out of poverty has done so via pro-freedom policies—specifically, economic freedom.
That’s how resource-poor places like Singapore and Taiwan became prosperous. Resource-rich places like Congo have struggled due to lack of economic freedom.
Even China, which is unfree in many ways (including insufficient protections against pollution) dramatically increased its standard of living via economic freedom—particularly in the realm of industrial development where it is now in many ways much freer than the US and Europe.

A crucial freedom involved in rising prosperity has been the freedom to use fossil fuels.Fossil fuels are a uniquely cost-effective source of energy, providing energy that’s low-cost, reliable, versatile, and scalable to billions of people in thousands of places.⁶

Time and again nations have increased their prosperity, including their safety from climate, via economic freedom and fossil fuels.Observe the 7X increase in fossil fuel use in China and India over the past 4 decades, which enabled them to industrialize and prosper.⁷

For the world’s poorest people to be more prosperous and safer from climate, they need more freedom and more fossil fuels.The “climate reparations” movement seeks to deny them both.
The wealthy world should communicate to the poor world that economic freedom is the path to prosperity, and encourage the poor world to reform its cultural and political institutions to embrace economic freedom—including fossil fuel freedom.Our leaders are doing the opposite.

Climate reparations pay off dictators to take away fossil fuel freedom

Instead of promoting economic freedom, including fossil fuel freedom, wealthy climate reparations advocates like Antonio Guterres are offering to entrench anti-freedom regimes by paying off their dictators and bureaucrats to eliminate fossil fuel freedom.This is disgusting.⁸

The biggest victim of “climate reparations” will be the world’s poorest countries, whose dictators will be paid off to prevent the fossil fuel freedom that has allowed not just the US and Europe but also China and India to dramatically increase their prosperity.

The biggest beneficiary of “climate reparations” will be China, which is already emitting more CO2 than the US and Europe combined. (Though less per capita.)While we flagellate and cripple ourselves, China will use fossil fuels in its quest to become the world’s superpower.⁹

The second biggest beneficiary of “climate reparations” will be corrupt do-gooders who get to add anti-fossil-fuel strings to “reparations” dollars and dictate how it’s spent—which will surely include lots of dollars for unreliable solar panels and wind turbines made in China.

Leaders must reject reparations and champion fossil fuel freedom

We need leaders in the US and Europe who proudly:1. Champion the free world’s use of fossil fuels as an enormous good for the world, including its climate safety.
2. Encourage the poor world to embrace economic freedom and fossil fuels.

Tell your Representative to do both.

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1 Scientific American – COP27 Summit Yields ‘Historic Win’ for Climate Reparations but Falls Short on Emissions Reductions

UN News – UN Secretary-General António Guterres called on Tuesday for countries to step up contributions to a financial mechanism to assist developing countries affected by climate change.

Phys.org – COP29 climate finance deal ‘must cover loss and damage,’ experts urge

COP29 official website – Fund for responding to Loss and Damage ready to accept contributions

2 Global population was about 8.02 billion in 2023.

World Bank data

About 7% of world population are considered high income, which translates into about 562 million individuals. Considering 3 people per average household in high income households, this translates into about 187 million households.
Pew Research – Are you in the global middle class? Find out with our income calculator

$1 trillion per annum paid by 187 million households means the average household would pay about $5,300 per year.

3 Maddison Database 2010 at the Groningen Growth and Development Centre, Faculty of Economics and Business at University of Groningen

World Bank Data

Scripps Institution of Oceanography – The Keeling Curve

G. Marland, T.A. Boden, and R.J. Andres, Carbon Dioxide Information Analysis Center, Environmental Sciences Division, Oak Ridge National Laboratory – Global, Regional, and National Fossil-Fuel CO2 Emissions

4 UC San Diego – The Keeling Curve

For every million people on earth, annual deaths from climate-related causes (extreme temperature, drought, flood, storms, wildfires) declined 98%–from an average of 247 per year during the 1920s to 2.5 in per year during the 2010s.

Data on disaster deaths come from EM-DAT, CRED / UCLouvain, Brussels, Belgium – www.emdat.be (D. Guha-Sapir).

Population estimates for the 1920s from the Maddison Database 2010, the Groningen Growth and Development Centre, Faculty of Economics and Business at University of Groningen. For years not shown, population is assumed to have grown at a steady rate.

Population estimates for the 2010s come from World Bank Data.